Rise in new home builds

There are early signs that the incentives for first home buyers of new homes in NSW are kicking in.

House building approvals seasonally adjusted for NSW were up by 8 per cent in February and were 28 per cent higher than a year ago, according to the Australian Bureau of Statistics.

"Such a surge in new home building does reflect the first sign that those incentives are starting to bite with first home buyers," said the senior economist at Australian Property Monitors, Andrew Wilson.

Home loan data has indicated that first home buyers have deserted the market in NSW since incentives to buy established homes were removed on September 30. There had been little evidence that first-timers were embracing the government's push to buy new with a $15,000 grant and stamp duty incentives.

Advertisement

But Dr Wilson said that appeared to be changing. "Prices are rising, rents are rising. We've got record low interest rates and they've got a bonus," he said.

"Combined with a solid local economy . . . activity in the long-subdued new home sector may finally be reviving."

The Housing Industry Association agreed. “We have seen indicators of consumer sentiment improve over recent months and we may well be seeing an early sign that this is flowing through to activity on the ground," its economist, Geordan Murray, said.

"After two consecutive months where approval numbers slipped back, it is pleasing to see a material improvement in February.”

Nationally, the number of dwelling approvals rose by 3.1 per cent.

“A 4.2 per cent increase in approvals for detached houses was the main driver of this result, although approvals for multi-unit dwellings also posted a 1.6 per cent increase during February,” Mr Murray said.

There were 1601 detached homes approved in NSW in February, making it one of only three months since 2005 when detached dwelling approvals had broken through the 1600 mark.

"The other two occurred during the financial crisis when federal stimulus policies were in full effect,” he said.

Dr Wilson said Victoria's rise in new house building was also "healthy", at 6.5 per cent.

"Despite this rise, Victorian house building approvals over the first two months of 2012 remain well below the levels of the same period a year ago – down by 8 per cent," he said.